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TMI Blog2021 (2) TMI 1316X X X X Extracts X X X X X X X X Extracts X X X X ..... r, that the locker had subsequently been reallocated to another customer. 2.2 On 29.05.1995 and 2.06.1995, the Appellant sent communications to Respondent No. 1 claiming that such breaking of his locker by the Bank was illegal since he had cleared dues for 19941995 on 30.07.1994, i.e., prior to the breaking of the locker. The Chief Manager of Respondent 1, who is Respondent No. 3 in the present appeal, responded to the communication and admitted to having inadvertently broken open the locker, though there were no outstanding dues to be paid, and apologized for the same. He stated as an ancillary point that reminders for the payment of dues had been sent on 25.11.1993 and 23.02.1994. However, that these would have no meaning since the dues were subsequently paid by the Appellant on 30.06.1994. 2.3 On 17.06.1995, when the Appellant went to collect the contents of the locker, it is alleged that he found only two (one pair of bangles and one pair of ear pussa) of the seven ornaments that had been deposited in the locker in a non-sealed envelope. However, Respondent No.1 Bank contends that only those two ornaments were found in the Appellant's locker when it was broken open. That the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for adjudication on the issue of the contents of the locker, it would be highly improbable to ascertain the same since the contents of a locker are exclusively known only to the locker holder. On the question of damages, he relied on Charan Singh v. Healing Touch Hospital & Ors. (2000) 7 SCC 668 to argue that compensation must be awarded to bring a qualitative change in the attitude of the service provider. 3.1 Per contra, learned counsel for the Respondents submitted that the National Commission's holding does not warrant interference. He submitted that compensation for the loss of jewellery can only be awarded after appreciation of evidence by the trial court. 4. Heard Learned Counsel for both parties. Based on a perusal of the record, the following issues arise for consideration in the present appeal: 4.1 First, Whether the Bank owes a duty of care to the locker holder under the laws of bailment or any other law with respect to the contents of the locker? Whether the same can be effectively adjudicated in the course of consumer dispute proceedings? 4.2 Second, irrespective of the answer to the previous issue, whether the Bank owes an independent duty of care to its cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In Cussen v. Southern Cal. Savings Bank, 65 P. 1099 (1901) money kept by the plaintiff in the bank's safe deposit vault was lost. The Supreme Court of California held that the bank was liable under the laws of bailment. However, it observed that the plaintiff would have to make a prima facie case that they had deposited the money inside the locker, and that it was subsequently lost. The burden of proof would then shift to the defendant bank to prove that it exercised the necessary care required under the laws of bailment for the protection of its contents. Therefore, before applying the laws of bailment, the court must first find on the facts of the case whether the plaintiff had transferred possession of the articles to the bank. 6. To identify if the relationship of bailment exists between the bank and the locker holder under Indian law, it is necessary at the outset to refer to the relevant provisions under the Indian Contract Act, 1872 ('Contract Act'): "148. 'Bailment', 'bailor' and 'bailee' defined.-A 'bailment' is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3422 There was no clause on the nature of the legal relationship between the bank and the locker holder in the 2007 Circular. The only reference to the Contract Act was as follows: "3.5 Banks are advised to be guided also by the provisions of Sections 45 ZC to 45 ZF of the Banking Regulation Act, 1949 and the Banking Companies (Nomination) Rules, 1985 and the relevant provisions of Indian Contract Act and Indian Succession Act." (emphasis supplied) However, this observation was made in the specific context of return of safe custody of articles to the survivors/legal heirs of deceased locker holders and hence may not have much bearing in the present case. 7.2 Subsequently, in response to a Right to Information ('RTI') enquiry made in 2017, the RBI, and various public sector banks, stated that as per the agreement entered into with the customers who are hiring/leasing the lockers, the banks have no liability for loss or damage of articles placed inside the bank lockers. Hence the position of the RBI from 2006 to 2017 has undergone a sea change. The position adopted by the banks was challenged before the Competition Commission of India ('CCI') as being in the nature of an anti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their safety deposit locker facility." (emphasis supplied) Therefore, the CCI took notice of the fact that it is common industry practice for banks to disclaim liability for loss of articles placed inside the locker, though there are no uniform parameters or policies guiding the same. Additionally, the banks have stated that acceptance of responsibility for loss of articles placed in their locker facility will depend upon the relevant facts and circumstances of each case, such as the terms of the locker hiring agreement, the circumstances under which the articles were lost or stolen, and so on. 8. There has also not been any authoritative pronouncement from this Court on the issue of whether banks are responsible as bailees, or in any other capacity, for any loss or damage to the contents of the lockers. However, there have been various High Court judgments guiding the field. One of the notable cases in which this issue arose was Jagdish Chandra Trikha v. Punjab National Bank. AIR 1998 Delhi 266 In this case, the appellants had, before the partition of India, entrusted a sealed box of gold ornaments to the respondent bank in Peshawar on the payment of a fee for safekeeping. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of rent. The customer is then provided with a key to the locker through which he can gain partial access to the locker. The bank has a master key to the locker and the customer can gain complete access to the locker only when the bank uses its own key to the locker. Therefore, a combination of the bank's key and the locker holder's key is required for opening a locker, providing neither with complete access. In more advanced, digitally operated locker systems, such 'keys' may not be physical keys but may consist of passwords or data which is exclusively known to the bank and the customer. Further, the bank may not have any receipt of the exact particulars of the articles placed inside the locker, as was the case in Jagdish Chandra Trikha (supra). The question that therefore arises for consideration before this Court is whether the modern day bank locker system would be guided by the laws of bailment. 8.2 An important decision which has considered the modernday bank locker system is that in Natioal Bank of Lahore Ltd. v. Sohan Lal Saigal. AIR 1962 P H 534 In that case, the appellant bank had provided locker service for the safe custody of valuables. The locker could be opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mehra v. Bank of Maharashtra, AIR 2003 P&H 11 which pertained to the same bundle of facts as in Mohinder Singh Nanda (supra). The appellant locker holders filed a suit alleging that due to the robbery, jewels worth Rs. 4,26,160/were stolen from his locker. It was claimed that the respondent bank had not complied with the duty of care owed under the laws of bailment. However, the trial court found that the knowledge of the weight and value of the articles stored inside the locker was exclusive to the customer, and the bank did not have notice of the same. Further, the appellants had not produced any evidence at the stage of trial to establish the contents of the locker. Consequently, the Single Judge Bench of Nijjar J. opined that the provisions with respect to bailment under the Contract Act would not apply as follows: "17...The respondent bank could only be fastened with liability on the contents of the locker being disclosed to it. In the absence of this information, it would have to be held that there was no entrustment of the goods to constitute bailment as required under Section 148 of the Indian Contract Act, 1872. 18...These authorities are of no assistance to the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) and Atul Mehra (supra) no evidence was led to prove the entrustment of jewelry to the bank, and hence the claimant locker holders were unable to succeed in obtaining relief. Nijjar J. further observed that: "22...Whatever property is deposited in the locker is, undoubtedly in the custody and possession of the bank. Merely because the locker can be operated only in the presence of the locker hirer would not amount to joint possession of the locker. The Banker can always open the locker with a "master key". The hirer of the locker is not in a position to open the locker without the assistance of the bank. The hirer has access to the locker only during specified banking hours. The banker has no such limitation. It must, however, be noticed that the transaction of bailment would only be established if the provisions of Section 148 of the Indian Contract Act are complied with. With regard to this, it is the submission of Mr. Jagga that the plaintiffs have miserably failed to prove that the jewellery was kept in the locker as claimed in the plaint. There being no entrustment or delivery of possession, Section 148 of the Act cannot be invoked by the plaintiffs." Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is relevant to note that in the facts of the aforementioned cases, the complainants had produced detailed and precise documentary proof for corroborating the extent of jewellery placed inside the locker, which has not been done in the present case. 8.8 In UCO Bank (supra), similar situation arose as in the present case, wherein the respondent locker holder claimed that his locker was tampered with and broken open, and valuables were subsequently lost, due to the negligence of the bank. The bank not only disputed the value of jewellery kept inside the locker, but also denied any negligence in the breaking open of the locker. The locker holder had only produced an affidavit in respect of the value of the jewellery claimed by him. Hence the National Commission held that it is appropriate that both these issues should be remitted for determination in a civil suit in a competent civil court, after adducing of elaborate evidence on both sides. 8.9 In the recent case of Mamta Chaudaha v. Branch Manager/Head Manager, State Bank of India, (2020) 1 CPJ 276 (NC) the National Commission again observed that the appellant locker holders had not produced any evidence apart from a standard af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or any other legal liability regime to the contents of the locker. The banks as custodians of public property cannot leave the customers in the lurch merely by claiming ignorance of the contents of the lockers. 9.1 In this regard, we may refer to the observations made by the National Commission in the decisions discussed in Part I of our opinion. In Punjab National Bank (supra), in addition to directing return of the cost of the ornaments lost, the National Commission also made a separate finding on the negligence of the bank in maintaining the security and safety of the locker: "4. The last and the most important question is whether the appellant Bank has been guilty of negligence in ensuring the security and safety of the locker. The State Commission has taken adverse notice of the fact that the appellant Bank did not probe departmentally when the locker had been found open on the 9th June, 1988and treated the matter as closed so far as the Bank is concerned. It was content with lodging a report with the police. It is a matter of common knowledge, the Master Key of the locker is with the Bank; the locker can be opened only with the Master Key and the Key with the locker hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en committed without the connivance of the bank authorities. If the locker in question was allotted to the applicant in the year 1978, it is not clear how it could be allotted to Mahendra Singh Siwach in the year 1979. Further, when Mahendra Singh Siwach has been operating the locker for all these years having his account No. 284 it is not understandable how the Bank could without verifying from record, accept the request of the applicant that the locker be broken open as the key had been lost. It was necessary for the bank authorities to have referred to the bank record and should have also intimated Mahendra Singh Siwach about this request of the applicant. Not only this, the bank authorities in the circumstances mentioned above should have prepared an inventory of the articles and should have got them valued before handing over the same to the applicant. It does not appear that the police has taken any action against the concerned delinquent bank official. The applicant accused claims that he was the owner of the property kept in the locker and the locker belonged to him. In these circumstances, when no action has been taken against the bank authorities, I think it proper to rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appointment should be made with the agents of the makers of lockers cabinet, to send their mechanic to drill open the Locker in consultation with the hirer(s). Locker should be broken open in the presence of the hirer(s), the Manager, Accountant and Custodian of the locker cabinet, and one respectable witness. A suitable remark about breaking open of Locker should be made in Locker Register, Renewal Diary and Specimen Signature Card. xxx The procedure laid down by the Reserve Bank of India guidelines has been completely flouted by the opposite party by not maintaining the locker register, locker key register, nonpayment of rent dues and lastly the procedure that should be adopted for breaking open a locker etc." (emphasis supplied) 9.3 In Mamata Chaudaha (supra), though the National Commission dismissed the complaint on the facts of that case, it noted that the relationship between the bank and the locker holders, who are also the account holders of the bank, will be that of a service provider and consumer. 10. We may also refer to the circulars which the RBI has issued on this subject from time to time. The 2007 Circular (supra) has, inter alia, provided the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of care. The banks are likely to draft the locker hiring agreements in a manner which is favourable to their interests, including clauses to the effect that the lockers are to be operated at the consumers' own risk. 10.1. On 1.07.2015, the RBI issued a Master Circular No. 59/201516 on Customer Service in Banks which included updated guidelines on locker operation. However, these were more or less similar to what has already been stated in the 2007 Circular. Further, neither of the aforementioned Circulars provide any guidance on the degree of care that needs to be exercised by the bank for safeguarding the lockers or detail the exact steps that should be taken in this regard. 11. It appears to us that the present state of regulations on the subject of locker management is inadequate and muddled. Each bank is following its own set of procedures and there is no uniformity in the rules. Further, going by their stand before the consumer fora, it seems that the banks are under the mistaken impression that not having knowledge of the contents of the locker exempts them from liability for failing to secure the lockers in themselves as well. In as much as we are the highest Court of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant laws and RBI regulations, if any. Breaking open of the locker in a manner other than that prescribed under law is an illegal act which amounts to gross deficiency of service on the part of the bank as a service provider. (k) Due notice in writing shall be given to the locker holder at a reasonable time prior to the breaking open of the locker. Moreover, the locker shall be broken open only in the presence of authorized officials and an independent witness after giving due notice to the locker holder. The bank must prepare a detailed inventory of any articles found inside the locker, after the locker is opened, and make a separate entry in the locker register, before returning them to the locker holder. The locker holder's signature should be obtained upon the receipt of such inventory so as to avoid any dispute in the future. (l) The bank must undertake proper verification procedures to ensure that no unauthorized party gains access to the locker. In case the locker remains inoperative for a long period of time, and the locker holder cannot be located, the banks shall transfer the contents of the locker to their nominees/legal heirs or dispose of the articles in a tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are steadily moving towards a cashless economy, people are hesitant to keep their liquid assets at home as was the case earlier. Thus, as is evident from the rising demand for such services, lockers have become an essential service provided by every banking institution. Such services may be availed of by citizens as well as by foreign nationals. Moreover, due to rapid gains in technology, we are now transitioning from dual keyoperated lockers to electronically operated lockers. In the latter system, though the customer may have partial access to the locker through passwords or ATM pin, etc., they are unlikely to possess the technological knowhow to control the operation of such lockers. On the other hand, there is the possibility that miscreants may manipulate the technologies used in these systems to gain access to the lockers without the customers' knowledge or consent. Thus the customer is completely at the mercy of the bank, which is the more resourceful party, for the protection of their assets. In such a situation, the banks cannot wash off their hands and claim that they bear no liability towards their customers for the operation of the locker. The very purpose for which the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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